Monday, April 22, 2019 10:41:24 AM
Here's the current v-Wave "Stocks" graph:
As you can see, even though the stock indexes are at or near their previous peaks the v-Wave is suggesting that market risk is quite a bit lower than at that previous peak. This doesn't mean that individual companies might not be over or under priced at this same time.
If you are buying mutual funds or ETFs, risk is quite a bit less than individual company stocks. Therefore you don't need as much cash on hand to be able to buy effectively to a future market low. Generally we've been suggesting to divide the "Stocks" value of the v-Wave by 1.5 to get an appropriate cash level for diversified mutual funds and/or ETFs. So, this week's value of about 46% for Stocks would equate to about 30% to 31% suggested cash for ETFs and funds.
I'd leave the SAFE values alone. There's too much potential emotional connection to those. Awaiting a "drawdown" will make most people crazy and again might be subject to emotional over-rides that could be wrong.
Much depends upon what sort of investment you're anticipating. For instance, in Value Line this week there are 3 drug store companies listed on the "Worst Performers" list for the latest 13 week period. Is this a "sector" thing or are there really three bad drug store chains simultaneously showing terrible results? Further, there are 11 companies listed there that are "retail" oriented (out of 41 companies, total). Does this mean that all retail is bad or that 11 companies are bad in the same sector? Some might view this as a sector rotation thing where others might feel it is the last dying breath for Brick and Mortar stores.
Hope this helps,
Tom
As you can see, even though the stock indexes are at or near their previous peaks the v-Wave is suggesting that market risk is quite a bit lower than at that previous peak. This doesn't mean that individual companies might not be over or under priced at this same time.
If you are buying mutual funds or ETFs, risk is quite a bit less than individual company stocks. Therefore you don't need as much cash on hand to be able to buy effectively to a future market low. Generally we've been suggesting to divide the "Stocks" value of the v-Wave by 1.5 to get an appropriate cash level for diversified mutual funds and/or ETFs. So, this week's value of about 46% for Stocks would equate to about 30% to 31% suggested cash for ETFs and funds.
I'd leave the SAFE values alone. There's too much potential emotional connection to those. Awaiting a "drawdown" will make most people crazy and again might be subject to emotional over-rides that could be wrong.
Much depends upon what sort of investment you're anticipating. For instance, in Value Line this week there are 3 drug store companies listed on the "Worst Performers" list for the latest 13 week period. Is this a "sector" thing or are there really three bad drug store chains simultaneously showing terrible results? Further, there are 11 companies listed there that are "retail" oriented (out of 41 companies, total). Does this mean that all retail is bad or that 11 companies are bad in the same sector? Some might view this as a sector rotation thing where others might feel it is the last dying breath for Brick and Mortar stores.
Hope this helps,
Tom
Buy from the Scared; Sell to the Greedy.....
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